Scammers say 'No' to drugs, 'Yes' to fraud

RSA 2005 Better credit card fraud detection techniques are encouraging crooks to look for easier pickings elsewhere. "The path of least resistance is moving on from credit card fraud to checking [current] account fraud. Fraud on debit cards, ATM transactions and money transfers are all on the rise," said Avivah Litan, research director at analyst Gartner.

Gartner's research suggests that cheque forgery and account fraud often happens offline. By contrast, data disclosures that lead up to credit card fraud predominantly occur online. An April 2004 Gartner survey estimated that 9.4m US adults were the victim of ID fraud over the preceding 12 months.

Gartner puts losses at $1.2bn a year, the bulk of which finds its way to criminal syndicates in Eastern Europe and African states. "Banks do not move at lightening speed, but they are losing money. It's a sensitive subject. They don't like to talk about it, but they are hurting," said Litan. Credit card fraud is "less risky and more lucrative than drug dealing" so criminal gangs are expanding into the arena.

Addressing losses through phishing scams and the like is driving spending on security technology in the financial services industry. By 2007, Gartner predicts 70 per cent of banks worldwide (and 75 per cent in the US) would move on from using static passwords alone to protect online accounts. "Banks won't necessarily be using tokens but they will be using something stronger than passwords," Litan said.

The analyst also said that stronger authentication needs to be supplemented by intelligent back-end fraud detection. "Good fraud detection techniques are in place for credit card fraud, so consumers will get a call if suspicious transactions are put through their account. This needs to be replicated across the (financial services) industry," she said. ®